A two-minute crash course on the consumer price index with NEWSWEEK’s Daniel Gross
The economic crisis is the result of flawed banking rules. In 5 minutes, learn the basics of how banks operate and why the rules must change.
he rules of banking allow banks to lend out 90% or more of the money of depositors under a system known as “fractional reserve banking”. This leads to the majority of all deposits in checking and savings accounts to be backed only by the promises of borrowers to pay back the loans on schedule and with interest. If the borrows are unwilling or unable to keep up their payments, the banks enter a state of crisis, and the deposits of all the savers are at risk.